Trending: Chilli Prices Rise, Reduced Exports Drive Local Costs

Tomato prices may have fallen but it seems like chillies are set to rise. Red chilli prices, which reached their highest point last March, might surge again in the upcoming weeks due to increased demand during the festival season and a lack of sufficient rainfall. The average prices of India's most exported spice have fallen from Rs 250 per kg to approximately Rs 230 due to reduced export demand. This drop has resulted in the accumulation of ample inventory to sustain until the new crop arrives in January.

In Andhra Pradesh, the primary chilli-producing region, cold storage currently holds around 35 lakh bags of chilli, each bag weighing approximately 35 kg. However, traders are reluctant to sell at lower prices since they purchased their stock when prices were higher while consumers are reluctant to buy at the current high prices.

Another factor contributing to a potential increase in chilli prices is the lower rainfall intensity expected in the coming weeks. While rain-fed areas have seen good sowing, regions dependent on irrigation are grappling with water shortages. Currently, the chilli production estimate for the next year is on par with or slightly lower than the previous season. A clearer picture will emerge around October as there is still time for the transplantation of chilli from nurseries to fields. 

Data from the Spices Board for April-June 2023 indicates robust exports of 1,36,527 tonnes valued at Rs 3,032 crore, representing a 30 per cent increase in volume and a 58 per cent rise in value compared to the same period the previous year. In FY23, India exported 5,16,185 tonnes of chilli, generating a record Rs 10,446 crore in revenue. Despite a seven per cent drop in quantity, the value increased by 22 per cent year-on-year.

The delayed onset of the southwest monsoon could push back the arrival of the new crop by a month. The chilli crop from Madhya Pradesh, which typically arrives in October, may be delayed until November this year. While anticipated showers in the coming weeks are expected to benefit the chilli crop, farmers remain concerned about pests like black thrips which cause relentless damage to crops.